Brussels Edition: Countering Trump's tariffs

The EU prepares to react to Trump's first tariff salvo hitting the bloc

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Welcome to the Brussels Edition, Bloomberg's daily briefing on what matters most in the heart of the European Union. The global tariff war triggered by Donald Trump opens a new chapter as the EU launched countermeasures this morning against new US tariffs on steel and aluminum, with plans to impose duties on €26 billion worth of American goods. The commission said in a statement that it would move forward with "swift and proportionate" measures. The bloc's executive activated a list from the previous metals dispute and proposed a new package of counter measures to match the economic damage inflicted by the US. The announcement came hours after the US administration imposed 25% tariffs on steel and aluminum imports in a massive escalation of the trade war between two longstanding allies. The firm response risks further fueling the trade dispute with Washington. Brussels and the capitals would strongly prefer to de-escalate.  — Gian M. Volpicelli

What's Happening

Step Forward | The US agreed to lift its freeze on military aid and intelligence sharing with Ukraine as Kyiv said it's ready to accept a US proposal for a 30-day truce during talks in Saudi Arabia. The US will now take the proposal to Russia, although it's unclear how Vladimir Putin will react. Western officials tell us that Putin has no intention to compromise. No Tariff | The EU's tax chief said that the bloc's value-added taxes shouldn't be part of the trade tensions with the Trump administration. "VAT is clearly not a tariff," Wopke Hoekstra told us, inviting US officials to "compare notes and truly look into the facts." Trump has repeatedly accused the EU of treating the US unfairly and said he plans to penalize countries for non-tariff barriers.  Yield Doubt | EU finance ministers are worried bond investors could be reluctant to finance their defense-spending plans, as that could push up yields across the bloc. Leaders are preparing to back looser budget rules to allow hundreds of billions more in military spending, but Economy Commissioner Valdis Dombrovskis said some finance chiefs raised "fiscal sustainability considerations." Return Order | The EU is proposing to allow countries to send people without the right to stay to "return hubs" outside of Europe, as the rise of anti-immigration parties is nudging the bloc to toughen its stance. The law would also create a "European Return Order," enabling the mutual recognition between EU countries of decisions that a person must leave the bloc. Banking Nod | Italian bank UniCredit will soon get permission to own as much as 29.9% of Commerzbank's shares, as CEO Andrea Orcel pursues a takeover of the German lender. The European Central Bank plans to give its formal approval by the beginning of next week.

Around Europe

Greenland Election | Greenland's voters threw their weight behind a slower approach to independence, electing Demokraatit as the surprise winner in a general election overshadowed by Donald Trump's plans to take over the Arctic Island. The results underscore how split the population is on the topic, as Naleraq, the party seeking the fastest breakup with Denmark, finished second. No Confidence | Portugal's government collapsed yesterday, setting the country on a path toward its third early election in just over three years. Prime Minister Luis Montenegro's center-right minority government lost a confidence motion that he called after struggling to put an end to speculation about potential conflicts of interest related to a company owned by his family. Defense Tech | Europe is nearing a defense spending spree of hundreds of billions, after Trump called into question decades of American support. That money won't just go into the so-called "primes" — the large defense companies that dominate the industry. The war in Ukraine has shown the need for rapid innovation of the kind that startups can offer. To find out who might step up, look no further than Estonia. Ban Upheld | Romania's constitutional court confirmed the ban on presidential front-runner Calin Georgescu from May's election. The judges in Bucharest rejected Georgescu's challenge to a Sunday ruling by the electoral bureau, which barred him from running due to his extremist and anti-democratic stances. Recent polls had shown Georgescu to have about 40% support and a serious shot at winning.

Chart of the Day

Hungary's inflation unexpectedly continued to accelerate for a fifth month in what the central bank under new Governor Mihaly Varga said warranted a continuation of tight monetary policy. Consumer prices rose an annual 5.6% in February, the fastest pace in 15 months. "There's no mercy when it comes to inflation," he said.

Today's Agenda

All times CET 11 a.m. Debate on action plan for European auto industry at the European Parliament in Strasbourg, France 5 p.m. European Parliament debates use of frozen Russian assets Defense Commissioner Andrius Kubilius takes part in E5 ministerial meeting and attends Paris Forum on Strategy and Defence in Paris EU ministers responsible for internal market and industry meet in Brussels

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